Africa urged to set up customs union

Africa's biggest trade bloc, Comesa, should establish a customs union by 2008 to boost trade by 25% and spur greater investment in the region, trade ministers have recommended.

31 May 2005 18:38 GMT

Smaller nations are fearful of embracing a customs union

Government officials and business representatives from the 19-member Common Market for Eastern and Southern Africa (Comesa) are meeting in Rwanda's capital Kigali to push for the customs union which has been delayed due to concerns over loss of revenues by governments and business groups.

Comesa's secretary-general, Erastus Mwencha, on Tuesday said African ministers would recommend to a heads of state meeting starting on Thursday to approve a plan charting the way ahead.

"The council of ministers has unanimously adopted a roadmap for the customs union, we see 2008 as the year for the customs union to kick off," he told reporters. Officials say customs duties contribute between 30 to 40% of government revenues for most Comesa countries.

The business communities from small economies like Rwanda have been reluctant to embrace the customs union, fearing their fragile industries will be wiped out by more established manufacturers from countries like Egypt, Kenya and Mauritius.

Common market

Analysts say the delay in the customs union could threaten Comesa's efforts to deepen integration through the formation of a common market and an economic community.

Comesa has a population of 380 million people and a combined GDP of about $200 billion.

Asia's textile exports to the EUhave hit Africa's market share

"We are dragging our feet too much on regional integration by resisting to embrace the opportunities of the moment in setting a clear timetable and make progress on a customs union, and the world is not waiting for us," Kenyan Trade Minister Mukhisa Kituyi, an influential voice in global trade liberalisation talks, said.

Trade between Comesa members rose to $5.4 billion last year from less than $1 billion a year before October 2000, when some countries agreed to sign a free trade area.

Mwencha said with market opportunities in Europe and the US dwindling as a result of new global trading agreements, Africa has to boost trade in the region.

Shrinking markets

"Our markets are shrinking abroad, the agreement on textile and clothing has sent us a strong message home that these markets are not there forever and so you need to develop intra-regional trade as a basis for survival," Kituyi said.

"We want to move on with the customs union but the business people lobby against it, we need their support"

Manasseh Nshuti,Rwandan Trade Minister

The Kenyan was referring to the end of the quotas on textiles that has sharply increased China and Asia's textile exports to the EU and the US and hit Africa's market share.

Manasseh Nshuti, Rwanda's trade minister, said in order for the customs union to succeed, the business community which has a penchant for demanding protection from the government, must embrace competition.

"We want to move on with the customs union but the business people lobby against it, we need their support," he said.

Representatives of business groups said governments must push to remove non-trade barriers, improve roads, ports and electricity supply and involve the private sector in decision- making for trade to thrive.